By Bill Alpert

School's out forever for the Education Department if the Trump administration has its way. That could be good news to for-profit education stocks. Companies such as Apollo Global Education, ITT Educational Services, and DeVry were once Wall Street darlings, until they caused grief with their sharp sales practices and student loan defaults.

The industry's survivors have a kindred spirit in Donald Trump. For-profits quadrupled in size under George W. Bush, with federal funding providing some 90% of revenue. But investor gains weren't matched by student or taxpayer benefits. The industry enrolled a tenth of postsecondary students but accounted for a third of student-loan defaults. Crackdowns by the Obama and Biden Education Departments resulted. Grand Canyon Education is still disputing a Federal Trade Commission suit alleging it violated telemarketing rules.

Their ranks reduced by bankruptcies and buyouts, for-profit stocks rejoiced in the department's rout. Adtalem Global Education, which owns some former DeVry schools, rose 19% on election week, and Grand Canyon, 26%. They're now up 125% and 38%, respectively, in the past 12 months.

In fact, revenue has been growing at more than 10% annually at both Grand Canyon and Adtalem, with operating margins above 20%. BMO Capital Markets analyst Jeff Silber has a Buy rating on both stocks, as well as the smaller Strategic Education.

Write to Bill Alpert at william.alpert@barrons.com

Last Week

Market

President Trump leveled tariffs against Mexico, Canada, and China. The dollar rose; stocks, Bitcoin, and commodity prices fell globally. Trump then agreed to temporary reprieves for Mexico and Canada. China hit back with tariffs on cars, farm machinery, and energy; launched an antitrust probe of Google (and possibly Apple) and export controls on rare metals; and blacklisted Illumina and Calvin Klein--owner PVH. U.S. stocks plunged, then rallied, led by tech. January job gains fell; Treasury yields rose. On a wild week, the Dow industrials and the Nasdaq Composite lost 0.5%, while the S&P 500 index fell 0.25%.

Companies

A federal judge paused Elon Musk and his DOGE team's takeover of the Treasury payment systems. Another judge blocked efforts to get federal workers to retire. Trump said he would create a sovereign-wealth fund to "facilitate" a TikTok sale and that the U.S. would take over Gaza and relocate Palestinian residents -- without troops. Vanguard made its biggest fee cut ever. Alphabet shares reeled from the China probe, slowing cloud growth, and higher AI spending. Amazon.com said it would boost AI outlays. Ford Motor warned on profits.

Deals

Trump said Nippon Steel would make a major investment in U.S. Steel, rather than acquire it...Pressed by Starboard Value, Becton Dickinson said it would spin off its life-sciences unit...Nissan Motor's board killed a $58 billion merger with Honda Motor and sought a new partner...U.S. mergers fell 30% in January.

Next Week

Monday 2/10

About 310 S&P 500 index companies have reported fourth-quarter results so far, with nearly 80% beating earnings-per-share estimates and 20% missing estimates. On tap for this week are McDonald's and Vertex Pharmaceuticals, which release results on Monday, followed by Coca-Cola and Shopify on Tuesday. Cisco Systems and CVS Health announce earnings on Wednesday, while Applied Materials and Deere do the same on Thursday.

Wednesday 2/12

The Bureau of Labor Statistics releases the consumer price index for January. Consensus estimate is for the CPI to increase 2.9% year over year. The core CPI, which strips out food and energy prices, is expected to rise 3.2%. Both estimates would match the December figures. The annual change in the CPI was 2.4% to 2.9% in the second half of last year, but has stalled in getting to the Federal Reserve's 2% inflation target. The BLS will also release its annual revisions to the CPI with this report, which may affect data from the previous five years.

Friday 2/14

The Census Bureau reports retail sales for January. Economists forecast retail spending to remain flat month over month, after a 0.4% increase in December.

The Numbers

30K

How much the U.S. Army missed its recruitment goals in 2022 and 2023. The Army met a reduced 2024 goal.

$320B

Proposed 2025 AI spending by Microsoft, Alphabet, Amazon, and Meta Platforms, up from 2024's $246 billion.

22%

The average increase State Farm, California's largest home insurer, is seeking from regulators in that state.

50%

The percentage of private-sector workers investing in 401(k)s, a record that took 50 years to achieve.

Write to Robert Teitelman at bob.teitelman@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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February 07, 2025 20:11 ET (01:11 GMT)

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